UBS lifts profit to $2.7 billion, speeds up buybacks despite capital concerns

By Ariane Luthi

ZURICH, Oct 28 (Reuters) - UBS posted third-quarter net profit of $2.69 billion on Wednesday, roughly in line with expectations, and accelerated its share buyback programme despite concerns over the impact of proposed new Swiss capital requirements.

The bank has made the amount and pace of share buybacks conditional on the outcome of a Swiss banking rules overhaul that follows the 2023 collapse of Credit Suisse and its state-engineered emergency takeover by UBS.

Switzerland's biggest bank is assessing the long-term consequences of the change for its ability to compete from its Swiss base, but is in no rush to act as any new rules will take time to be implemented, CEO Sergio Ermotti told analysts.

New rules being debated in a Swiss parliamentary committee are expected to reach the lower house in December. The upper house last month proposed rules that UBS suggested were unacceptable.

The chairman of UBS has warned it would need to carefully consider its future in Switzerland if the rules are too harsh, while some investors have called for it to quit the country.

"Being a bank that has a DNA of Swissness, that is rooted in Switzerland, is a big advantage, but it's not the reason why our clients are banking with us," Ermotti said on Wednesday.

UBS said it hopes parliament will reach a solution that supports Switzerland's financial stability without imposing undue costs on UBS's shareholders, clients and employees.

"UBS remains strategically committed to its diversified business model and its global and regional footprint," it added.

The net profit was 8% higher year-on-year and compared with a $2.71 billion consensus forecast by analysts in a UBS poll.

"Overall a solid set of results, albeit focus will continue to be on any business implications from the new Swiss capital rules," Citi analysts said.

UBS said it had repurchased $1.8 billion of shares in the quarter and plans to complete its $3 billion buyback programme by February, rather than by mid-2027 as announced previously.

HSBC sent a chill through the sector on Tuesday after it disappointed investors with its revenue growth, sending shares in Europe's most valuable bank lower.

Deutsche Bank and BNP Paribas are among the other major banks reporting this week, with investors watching to see if they can sustain recent record profits.

UBS said investor sentiment remains measured due to macroeconomic volatility, geopolitical tension and political uncertainty.

INFLOWS IN ASIA AND AMERICAS

UBS' performance was supported by net new assets of $55 billion in global wealth management, driven by inflows of $18 billion in Asia and $17 billion in the Americas.

Profitability in the Americas improved, with the profit-before-tax margin up by over 2 percentage points, UBS said.

The Credit Suisse integration is on track for completion by year-end, UBS said, with cumulative cost savings by end-2026 now expected at around $13.7 billion, up from around $13.5 billion.

Staff levels dropped by almost 1,500 full-time employees in the quarter as integration progressed. Employees at the bank are running more than 12,700 personal AI agents and the bank keeps investing in the technology, UBS said.

The bank's cost-income ratio dropped to 72.3% at the end of the third quarter from 77% a year earlier.

(Reporting by Ariane Luthi; Editing by Muralikumar Anantharaman and Alexander Smith)